ROPEPCA opposes ANRM's methodology for setting reference price for natural gas extracted in Romania

The Romanian Petroleum Exploration and Production Companies Association (ROPEPCA) has announced that it stands against the ANRM (the National Agency for Mineral Resources) order approving the methodology for establishing the reference price for the natural gas extracted in Romania.

According to this order, the reference price for natural gas extracted in Romania will be calculated according to the trading prices of the hub from CEGH Vienna, based on a calculation formula made together with the Oil and Gas University Ploiesti.

Romanian natural gas producers have so far paid the royalty for the gas produced at the level of the revenue generated, a basic principle for any tax applied to income.

“The so-called “reference price” is nothing but a minimal value for the royalties base, which cannot be undercut,” according to ROPEPCA’s statement.

The association continues: “Other public institutions, including ANAF, take into account the income generated from the sale of gas for calculating various other taxes. Why does ANRM disregard the same basis for calculating the royalty? The proposal to relate the royalty for the gas produced in Romania to a virtual figure from abroad, a figure much higher than the domestic prices, shows a lack of sovereignty and a total indifference regarding the way the natural gas market in Romania functions.”

ROPEPCA accuses the ANRM of issuing the order without taking into account the positions expressed by the main domestic natural gas producers during a public consultation, and instead based it exclusively on the conclusions of a study signed by a university professor from the Oil and Gas University of Ploiesti.

During the public debate organised by ANRM, natural gas producers expressed a unitary position, supported by university professors or journalists in the field.

Harald Kraft, ROPEPCA president, said: “The reference price must be represented by the market price in Romania. We believe that an external market does not represent the Romanian market, we have nothing to do with the Baumgarten hub in Austria where the gas is sold several times and it is not the right way to pay royalties in Romania. A fair approach would be to pay royalties at the market price set by the producers in Romania, not from the outside.”

ROPEPCA argues that because Romania currently does not export gas, therefore it is not really related to the European market, and that the Romanian market is not liquid enough, it cannot report to external hubs for gas trading. Moreover, natural gas producers have a legal obligation to sell part of their domestic production on the centralised market in Romania, which makes the reference to an external hub even less relevant, according to the association.